EU regulators green light Suez-GDF merger

14th November 2006, 0 comments

BRUSSELS, Nov 14, 2006 (AFP) - The European Commission on Tuesday cleared French energy group Suez's takeover of Gaz de France after receiving promises that some key assets would be sold off to protect competition.

BRUSSELS, Nov 14, 2006 (AFP) - The European Commission on Tuesday cleared French energy group Suez's takeover of Gaz de France after receiving promises that some key assets would be sold off to protect competition.

The commission's blessing brings the two firms one step closer to a marriage that has been threatened by opposition from unions, some political parties and rebellious shareholders not to mention jealous foreign suitors angry at being frozen out.

The EU antitrust watchdog found in an in-depth probe that the deal would harm competition in Belgium and France and called on the two companies to offer 'remedies' to fix the situation.

In response, the two companies agreed to sell off prime assets mainly in Belgium.

EU Competition Commissioner Neelie Kroes said: "The Commission has insisted on far-reaching remedies in this case so as to ensure effective competition in the Belgian and French energy markets."

"Our intervention in this case is part of our action to ensure that there is effective competition in the newly liberalised energy markets to the benefit of consumers and business," she added.

From the start the takeover was fraught with risks, especially because it was widely seen as being orchestrated by the French government to keep Italian energy group Enel from buying Suez.

The French government announced plans to merge state-controlled GDF with Suez in February, sparking a hail of criticism from Italy because Enel had recently expressed interest in Suez.

While Rome was in revolt at the perceived French protectionism, the deal also raised eyebrows in Brussels, which has complained in the past that the EU energy market is too concentrated in the hands of a few national giants and had previously called for more cross-border mergers.

But even in France, the government has struggled to sell the merger because it requires reducing the state's stake in GDF, a deeply unpopular move with unions and the opposition.

Recently some shareholders have also protested at the terms of the takeover, judging that they are not getting a fair deal.